La Evaluación de la Probabilidad de Fracaso Financiero: Contraste Empírico del Contenido Informacional de la Auditoría de Cuentas (Evaluating the Probability of a Financial Failure: An Empirical Test of the Information Content of Audit Reports)
Spanish Journal of Finance and Accounting, Nº 156, 2012, pp. 565-588
22 Pages Posted: 8 Jul 2012 Last revised: 4 Jul 2016
Date Written: June 10, 2012
Abstract
Spanish Abstract: La posibilidad de detectar las tensiones financieras latentes de la empresa, y de anticipar eventuales fallos financieros en el futuro, es una cuestión de extraordinaria importancia para la actividad económica por sus implicaciones sobre el riesgo de crédito y sobre la estabilidad financiera de clientes, proveedores, y otros grupos de interés. Aplicando métodos de regresión logística sobre una muestra de pymes, este trabajo analiza si el proceso de auditoría externa proporciona indicios significativos de cara a inferir la existencia de tensiones financieras latentes en el cliente, y evaluar la probabilidad de que éste sufra un fallo financiero. Los resultados indican que ciertas evidencias externas, como la reiteración de dictámenes con salvedades o las tasas anómalas de rotación de auditores, están relacionadas con fenómenos subyacentes de tensión financiera y pueden ser utilizadas como medidas fiables de riesgo de crédito y predictores de la probabilidad de incurrir en una insolvencia.
English Abstract: Detecting corporate latent financial distress, and anticipating future bankruptcies, are critical issues for financial management, given their implications for credit risk and the collateral effects on financial stability of customers, suppliers, and other stakeholders. We analyze whether audit reports provide relevant evidences in order to infer client’s financial distress, and to assess the likelihood of a financial failure. The results indicate that some external evidences, such as the accumulation of qualified reports and abnormally high auditor’s rotation rates, may be used as reliable measures of credit risk and predictors of the likelihood that the company goes bankrupt. Model offers an up-to 87% hit rate.
Note: Downloadable document is in Spanish.
Keywords: financial failure forecast; external audit, financial information quality
JEL Classification: G33, M41, D81
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Value of Verification in Debt Financing: Evidence from Private U.S. Firms
-
Voluntary Audits and the Cost of Debt Capital for Privately Held Firms: Korean Evidence
By Jeong-bon Kim, Dan A. Simunic, ...
-
Voluntary Audit and the Cost of Debt Capital for Privately Held Firms: Korean Evidence
By Dan A. Simunic, Jeong-bon Kim, ...
-
What Do We Learn from Two New Accounting-Based Stock Market Anomalies?
By Sudipta Basu
-
Do Private Company Targets that Hire Big 4 Auditors Receive Higher Proceeds?
By Gus De Franco, Ilanit Gavious, ...
-
By Gavin Cassar, Ken Cavalluzzo, ...
-
Selective Auditor Rotation and Earnings Management: Evidence from Korea
By Jeong-bon Kim, Chung-ki Min, ...